The concession procedure of the Brazilian airport, which is already ten years old, entered its seventh iteration with the Congonhas airport in São Paulo, the busiest time in the country, despite everything included. But that inclusion was with 10 much smaller ones; what has been described by a Brazilian analyst as a “Frankenstein monster”.
This did not save AENA from submitting an indisputable offer of 230% of the requested value; basically, for an airport it will be very difficult to expand.
Separately, a very small “northern block” of two airports found a concessionaire with a decreasing premium, around 120%, while two commercial/GA airports in São Paulo and Rio de Janeiro opted for the base price.
With more than 90% of air traffic now represented through concessioned airports and only Rio’s Santos Dumont Airport remains significant, the eighth circular, scheduled for 2023 and filling Santos Dumont with a reconcession of the city’s Galeão International Airport caused by the original concessionaire that does so – the last one.
Summary
The airport concessions program to date in Brazil has transferred 77. 5% of domestic traffic to the private sector between 2011 and 2021. With the 7th cycle, it is expected to reach the percentage of 91. 6% of passengers served at authorized airports in the country.
Brazilian regulator ANAC announced the winners of the seventh auction of airport concessions, which included a block of general aviation airports and a “northern block” of two small passenger advertising airports.
It was conceivable that the same bidder would win all 3 tenders, but airports are too disparate for that. In addition, one of the teams is the smallest recorded to date in terms of annual passenger traffic, while another is limited to general/business aviation airports, albeit in São Paulo and Rio de Janeiro.
Two of the blocks attracted one bidder each.
The block that has attracted the most media attention (albeit only one bidder) is called “Block SP-MS-PA-MG”, which refers to the (geographically diverse) states in which the airports are located: SP is São Paulo, MG is Minas Gerais, etc.
And in particular, this state block comprises the fully domestic airport of São Paulo Congonhas, which is the busiest time in the country, serving the largest city in Brazil and South America, and decided (along with Rio de Janeiro’s Santos Dumont Airport) in past auctions. The goal is for it to be granted separately, while Santos Dumont is already involved in a comprehensive agreement that is expected to materialize in 2023 and also reaches a new tender for Galeão International Airport in the same city.
Instead, Congonhas included in an organization of 11 airports in total, what one experienced local observer called a “Frankenstein monster,” arguing that it would have been better if Congonhas had bid alone and that, in fact, it would have been more attractive to bidders.
Some of the block’s airports are about a four-hour flight from Congonhas (although other airport blocks granted in the past have a similar feature), and although Congonhas is a “revenue stream,” the addition of 10 additional airports (many of “bones on steak” to use the local phrase) has made it less digestible for bidders.
In addition, the other airports in the SP/MS/PA/MG block are small.
Campo Grande airport was the busiest in 2019, with 1. 5 million passengers, followed by Uberlândia with 1. 1 million. No other airport had more than 500,000 passengers that year, and one had only 4,000.
In contrast, Congon treated only about 22 million domestic passengers in 2019.
The complete list of airports included in this block is: São Paulo Congonhas Airport; Campo Grande Ueze Elias Zahran International Airport; Corumbá International Airport; Ponta Porã International Airport; Maestro Wilson Fonseca Airport in Santarém; Marabá Airport; Carajás Airport; Altamira Airport; Uberlândia César Bombonato Airport; Uberaba Airport; Montes Claros Airport.
Whatever the local sentiment about the bloc’s prospects for selling, that hasn’t stopped privatized Spanish operator AENA from promoting it through its “International” division, which already operates a number of airports in Latin America. These include six in Brazil that it put under concession in 2019 on a 30-year contract – Recife Guararapes International Airport; Maceió Zumbi dos Palmares Airport; João Pessoa Castro Pinto Airport; Aracajú Airport; Campiña Grande Airport; and Juazeiro do Norte Airport.
This block had a combined more than 13. 7 million passengers in 2018, representing 6. 5% of BrazilianArray’s total
Recife Airport is the 8th in Brazil in total passenger traffic and the 5th in foreign passenger traffic.
The so-called AENA Aeroportos do Nordeste do Brasil are operated.
AENA won the tender for the SP-MS-PA-MG block with a bid of BRL 2. 45 billion (USD 474. 03 million), 231% above the minimum price requested. AENA has been a bidder for the concessions program in general since 2017.
All individual concessions are valid for 30 years, and AENA intends to invest BRL five billion (USD 967. 40 million) during the era. Estimated revenue during the concession era is BRL 11. 6 billion (USD 2. 24 billion).
AENA Internacional can simply create a Brazilian subsidiary to operate them, as it did with Aeroportos do Nordeste.
It is to pay attention to the monetary figures here because they testify to the lasting attractiveness of those Brazilian airport concessions internationally.
All this despite the economic trauma that the country is going through, the effect of the COVID-19 pandemic and the political uncertainty that continues to envelop the government and the president, Jair Bolsonaro, who faces presidential elections in October 2022. and is challenged through Luiz Inácio Lula da Silva, a former president imprisoned for money laundering in 2017.
“Lula,” as he is called, is the ballot box.
Lula’s president from 2003 to 2010, one year before the airport concession procedure; the proceedings began under the presidency of his successor, Dilma Rousseff, who later fired and got rid of office. Both were socialists, but at least Rousseff was an economist by training.
There is no certainty of what Lula will do with respect to the airport’s concession program.
Before taking office, Lula had criticized privatization. In his administration, however, his administration created public-private partnership concessions for many federal routes, which preceded the airport concessions initiated through Rousseff and her successor, Michel Temer.
Returning to the financial figures, profits of several hundred percent above the minimum requested value have been recorded since the start of the procedure in 2011.
For example, in the circular of the moment of 2014, this is exactly what happened with respect to the Galeão de Rio International Airport and the Belo Horizonte Tancredo Neves Airport.
Subsequently, measures were taken related to the exaggeration of traffic forecasts and the country’s economic prospects, and the Rio airport will be tendered, along with others. But that hasn’t dampened enthusiasm for Brazil’s airports inside and outside the country. despite political uncertainty.
There is no doubt that AENA’s greatest interest was in Congonhas, but “cherry selection” is not allowed in Brazilian concessions. investments that you can rather expect.
This is where the observation about the “Frankenstein’s Monster” comes in.
On the other hand, it can only be said that AENA has a great experience at the national level in the operation of small unprofitable airports, which are subsidized through Madrid, Barcelona and the continental airports of the coasts and islands with their crowds. of foreign visitors.
The law that privatized it did allow it to “unload” from those small airports.
At the same time, Congonhas would possibly not be simple either.
Located in a densely urbanized area, it is one of five Brazilian airports with slot restrictions, allowing a speed of 30 constant flights per hour. Short runways dictate that the largest aircraft there are the A320 and Boeing 737 series.
Congestion existed before Guarulhos Airport opened in 1985 and did not do so afterwards. There is no known target for authorizing foreign transactions there.
AENA has thus inherited an airport with limited operations, which are not expected to increase, in small aircraft, and with a limited area to serve non-aeronautical activities.
The only genuine merit it bestows is its short distance from the city center and the main business districts of Paulista, Faria Lima and Luís Carlos Berrini avenues, which makes Congonhas a favorite of business travelers.
But if it can’t grow, what’s the appeal besides increasing rates?
If it didn’t exist and there was an empty two-square-kilometer lot, the last thing to be built there would be an airport.
Expansion of traffic capable of sticking to that of Guarulhos airport (3. 5% compared to 4. 8% in Guarulhos during the period 2012-2019; 2012 being the first year of concessions). In addition, it grows twice as fast again in 2022 as Guarulhos.
And AENA will be able to take comfort in the fact that Congonhas has exceeded the average expansion rate of domestic traffic in Brazil at the same time (1. 9%).
However, the 3. 5% expansion consistent with the year over 8 years, on average, is hardly noticeable.
Turning briefly to the other two blocks auctioned in this round, the Novo Norte consortium, formed through the Brazilian corporations Socicam and Sinart, beat the (already established in Brazil) VINCI Airports for the exploitation rights of the airports of the capital of the state of Pará, Belém (Val de Cans airport) and Macapá-Alberto Alcolumbre external airport, capital of the state of Amapá.
Its winning bid R$ 125 million, 120% above the minimum bid.
Estimated revenue from the concession is BRL 1. 9 billion (USD 367. 61 million).
Both airports are exclusively, or almost, national, but have the services of the main airlines of the country (LATAM, Gol, Azul).
Again, the concessions are valid for 30 years.
Originally a bus terminal operator – before diversifying into ports, airports, car parks, shopping centers and citizen service and, as of 2008, launching overseas operations in terminals in Chile and Peru – Socicam has already established itself as the largest operator of personal airports in Brazil, in the sense that it operates 24 airport terminals throughout the country.
Grupo Sinart is also strongly located in the bus sector, managing more than 35 bus stations throughout Brazil.
Finally, the General Aviation Block awarded the XP Infra IV FIP EM INFRAESTRUCTURA consortium for BRL 141. 4 million (USD 27. 36 million), or 0. 01% of the requested price. XP Infra is a Brazilian infrastructure fund.
The concession includes São Paulo Campo de Marte Airport and Rio de Janeiro Jacarepaguá Airport. The entity is the only one interested in this operation.
Estimated revenues from the concession are BRL 1. 7 billion (USD 328. 92 million) and both concessions are valid for 30 years.
Begun in 1920, the Campo de Marte Airport (operated through the state entity Infraero) was the first airport built to serve the city of São Paulo.
The airport is almost in the center of the city. It is a joint civilian/military installation and does not get any normal service. Several flight schools, charter flight operators and general aviation aircraft are located at the airport and from 2012 to the present day it has suffered significant and uninterrupted traffic losses.
Jacarepaguá Airport (also known as Jacarepaguá Roberto Marinho Airport) is located in the Barra da Tijuca community of Rio de Janeiro. Again, the airport was operated through Infraero. Overall, its traffic losses have also been significant over the past decade, there has been strong expansion in a few years.
Campo de Marte has a 1,600 m runway that may only deal with advertising traffic, but the Jacarepaguá track is only 900 m away.
AENA would be satisfied if advertising operations were then allowed on The Champ de Mars and its physical location is as limited as That of Congonhas anyway.
One that emerges from this concession tranche is: is it running out now?
The multi-state bloc with Congonhas that AENA won well above what it asked for and in line with the initial concessions, which included Guarulhos.
But in the case of the much smaller northern block of two airports, the final value is well below the requested price, while it is au pair for general aviation airports.
Meanwhile, the estimated revenue for those GA airports, none of which have shown their more than a decade, are almost as huge as those for the northern block airports.
The 8th circular of concessions, next year, will come with Rio’s Santos Dumont Airport, the national equivalent of Congonhas, with a reconcession of that city’s Galeão International Airport, which it sold through the original concessionaire.
If there is going to be a ninth circular of concessions (many airports remain), other anomalies may follow.
Meanwhile, the next step in this auction will be the receipt of qualification documents from the block winning bidders, which is scheduled for August 25.
The signing of the concession contracts must take place after the approval of the result by the Board of Directors of the ANAC, on a date yet to be defined.
The concession procedure of the Brazilian airport, which is already ten years old, entered its seventh iteration with the Congonhas airport in São Paulo, the busiest time in the country, despite everything included. But that inclusion was with 10 much smaller ones; what has been described by a Brazilian analyst as a “Frankenstein monster”.
This did not save AENA from submitting an indisputable offer of 230% of the requested value; basically, for an airport it will be very difficult to expand.
Separately, a very small “northern block” of two airports found a concessionaire with a decreasing premium, around 120%, while two commercial/GA airports in São Paulo and Rio de Janeiro opted for the base price.
With more than 90% of air traffic now represented through concessioned airports and only Rio’s Santos Dumont Airport remains significant, the eighth circular, scheduled for 2023 and filling Santos Dumont with a reconcession of the city’s Galeão International Airport caused by the original concessionaire that does so – the last one.
Summary
The airport concessions program to date in Brazil has transferred 77. 5% of domestic traffic to the private sector between 2011 and 2021. With the 7th cycle, it is expected to reach the percentage of 91. 6% of passengers served at authorized airports in the country.
Brazilian regulator ANAC announced the winners of the seventh auction of airport concessions, which included a block of general aviation airports and a “northern block” of two small passenger advertising airports.
It was conceivable that the same bidder would win all 3 tenders, but airports are too disparate for that. In addition, one of the teams is the smallest recorded to date in terms of annual passenger traffic, while another is limited to general/business aviation airports, albeit in São Paulo and Rio de Janeiro.
Two of the blocks attracted one bidder each.
The block that has attracted the most media attention (although only one bidder) is called “Block SP-MS-PA-MG”, which refers to the (geographically diverse) states in which the airports are located: SP is São Paulo, MG is Minas Gerais, etc.
And in particular, this state block comprises the fully domestic airport of São Paulo Congonhas, which is the busiest time in the country, serving the largest city in Brazil and South America, and decided (along with Rio de Janeiro’s Santos Dumont Airport) in past auctions. The goal is for it to be granted separately, while Santos Dumont is already involved in a comprehensive agreement that is expected to materialize in 2023 and also reaches a new tender for Galeão International Airport in the same city.
Instead, Congonhas included in an organization of 11 airports in total, what one experienced local observer called a “Frankenstein monster,” arguing that it would have been better if Congonhas had bid alone and that, in fact, it would have been more attractive to bidders.
Some of the block’s airports are about a four-hour flight from Congonhas (although other airport blocks granted in the past have a similar feature), and although Congonhas is a “revenue stream,” the addition of 10 additional airports (many of “bones on steak” to use the local phrase) has made it less digestible for bidders.
In addition, the other airports in the SP/MS/PA/MG block are small.
Campo Grande airport was the busiest in 2019, with 1. 5 million passengers, followed by Uberlândia with 1. 1 million. No other airport had more than 500,000 passengers that year, and one had only 4,000.
In contrast, Congon treated only about 22 million domestic passengers in 2019.
The complete list of airports included in this block is: São Paulo Congonhas Airport; Campo Grande Ueze Elias Zahran International Airport; Corumbá International Airport; Ponta Porã International Airport; Maestro Wilson Fonseca Airport in Santarém; Marabá Airport; Carajás Airport; Altamira Airport; Uberlândia César Bombonato Airport; Uberaba Airport; Montes Claros Airport.
Whatever the local sentiment about the bloc’s prospects for selling, that hasn’t stopped privatized Spanish operator AENA from promoting it through its “International” division, which already operates a number of airports in Latin America. These include six in Brazil that it put under concession in 2019 on a 30-year contract – Recife Guararapes International Airport; Maceió Zumbi dos Palmares Airport; João Pessoa Castro Pinto Airport; Aracajú Airport; Campiña Grande Airport; and Juazeiro do Norte Airport.
This block had a total of more than 13. 7 million passengers in 2018, representing 6. 5% of BrazilianArray’s total
Recife Airport is the 8th in Brazil in total passenger traffic and the 5th in foreign passenger traffic.
The so-called AENA Aeroportos do Nordeste do Brasil are operated.
Active airports for AENA Aeroportos do Nordeste do Brasil
Source: CAPA – Aviation Center.
AENA won the tender for the SP-MS-PA-MG block with a bid of BRL 2. 45 billion (USD 474. 03 million), 231% above the minimum price requested. AENA has been a bidder for the concessions program in general since 2017.
All individual concessions are valid for 30 years, and AENA intends to invest BRL five billion (USD 967. 40 million) during the era. Estimated revenue during the concession era is BRL 11. 6 billion (USD 2. 24 billion).
AENA Internacional can simply create a Brazilian subsidiary to operate them, as it did with Aeroportos do Nordeste.
Active airports for AENA International in Brazil, with these additions
Source: CAPA – Aviation Center
It is to pay attention to the monetary figures here because they testify to the lasting attractiveness of those Brazilian airport concessions internationally.
All this despite the economic trauma that the country is going through, the effect of the COVID-19 pandemic and the political uncertainty that continues to envelop the government and the president, Jair Bolsonaro, who faces presidential elections in October 2022. and is challenged through Luiz Inácio Lula da Silva, a former president imprisoned for money laundering in 2017.
“Lula,” as he is called, is the ballot box.
Lula’s president from 2003 to 2010, one year before the airport concession procedure; the proceedings began under the presidency of his successor, Dilma Rousseff, who later fired and got rid of office. Both were socialists, but at least Rousseff was an economist by training.
There is no certainty of what Lula will do with respect to the airport’s concession program.
Before taking office, Lula had criticized privatization. In his administration, however, his administration created public-private partnership concessions for many federal routes, which preceded the airport concessions initiated through Rousseff and her successor, Michel Temer.
Returning to the financial figures, profits of several hundred percent above the minimum requested value have been recorded since the start of the procedure in 2011.
For example, in the circular of the moment of 2014, this is exactly what happened with respect to the Galeão de Rio International Airport and the Belo Horizonte Tancredo Neves Airport.
Subsequently, measures were taken related to the exaggeration of traffic forecasts and the country’s economic prospects, and the Rio airport will be tendered, along with others. But that hasn’t dampened enthusiasm for Brazil’s airports inside and outside the country. despite political uncertainty.
There is no doubt that AENA’s greatest interest was in Congonhas, but “cherry selection” is not allowed in Brazilian concessions. investments that you can rather expect.
This is where the observation about the “Frankenstein’s Monster” comes in.
On the other hand, it can only be said that AENA has a great experience at the national level in the operation of small unprofitable airports, which are subsidized through Madrid, Barcelona and the continental airports of the coasts and islands with their crowds. of foreign visitors.
The law that privatized it did allow it to “unload” from those small airports.
At the same time, Congonhas would possibly not be simple either.
Located in a densely urbanized area, it is one of five Brazilian airports with slot restrictions, allowing a speed of 30 constant flights per hour. Short runways dictate that the largest aircraft there are the A320 and Boeing 737 series.
Congestion existed before Guarulhos Airport opened in 1985 and did not do so afterwards. There is no known target for authorizing foreign transactions there.
AENA thus inherited an airport with limited operations, which do not increase, in small aircraft, and with limited area to serve non-aeronautical activities.
The only genuine merit it bestows is its short distance from the city center and the main business districts of Paulista, Faria Lima and Luís Carlos Berrini avenues, which makes Congonhas a favorite of business travelers.
But if it can’t grow, what’s the appeal besides increasing rates?
If it didn’t exist and there was an empty two-square-kilometer lot, the last thing to be built there would be an airport.
Landlocked in all – Congonhas Airport, São Paulo BR
Source: Google Maps
Expansion of traffic capable of sticking to that of Guarulhos airport (3. 5% compared to 4. 8% in Guarulhos during the period 2012-2019; 2012 being the first year of concessions). In addition, it grows twice as fast again in 2022 as Guarulhos.
And AENA will be able to take comfort in the fact that Congonhas has exceeded the average expansion rate of domestic traffic in Brazil at the same time (1. 9%).
However, the 3. 5% expansion consistent with the year over 8 years, on average, is hardly noticeable.
São Paulo Congonhas Airport: annual traffic, number of passengers/growth from 2012 to 2022
Source: CAPA – Aviation Center and INFRAERO
Turning briefly to the other two blocks auctioned in this round, the Novo Norte consortium, formed through the Brazilian corporations Socicam and Sinart, beat the (already established in Brazil) VINCI Airports for the exploitation rights of the airports of the capital of the state of Pará, Belém (Val de Cans airport) and Macapá-Alberto Alcolumbre external airport, capital of the state of Amapá.
Its winning bid R$ 125 million, 120% above the minimum bid.
Estimated revenue from the concession is BRL 1. 9 billion (USD 367. 61 million).
Both airports are exclusively, or almost, national, but have the services of the main airlines of the country (LATAM, Gol, Azul).
Again, the concessions are valid for 30 years.
Originally a bus terminal operator – before diversifying into ports, airports, car parks, shopping centers and citizen service and, as of 2008, launching overseas operations in terminals in Chile and Peru – Socicam has already established itself as the largest operator of personal airports in Brazil, in the sense that it operates 24 airport terminals throughout the country.
Grupo Sinart is also strongly located in the bus sector, managing more than 35 bus stations throughout Brazil.
Finally, the General Aviation Block awarded the XP Infra IV FIP EM INFRAESTRUCTURA consortium for BRL 141. 4 million (USD 27. 36 million), or 0. 01% of the requested price. XP Infra is a Brazilian infrastructure fund.
The concession includes São Paulo Campo de Marte Airport and Rio de Janeiro Jacarepaguá Airport. The entity is the only one interested in this operation.
Estimated revenue from the concession is BRL 1. 7 billion (USD 328. 92 million) and, again, any of the concessions are valid for 30 years.
Starting its operations in 1920, The Campo de Marte Airport (operated through the state entity Infraero) was the first airport built to serve the city of São Paulo.
The airport is almost in the center of the city. It is a joint civilian/military installation and does not get any normal service. Several flight schools, charter flight operators and general aviation aircraft are located at the airport and from 2012 to the present day it has suffered significant and uninterrupted traffic losses.
Jacarepaguá Airport (also known as Jacarepaguá Roberto Marinho Airport) is located in the Barra da Tijuca community of Rio de Janeiro. Again, the airport was operated through Infraero. Overall, its traffic losses have also been significant over the past decade, there has been strong expansion in a few years.
Campo de Marte has a 1,600 m runway that may only deal with advertising traffic, but the Jacarepaguá track is only 900 m away.
AENA would be satisfied if advertising operations were then allowed on The Champ de Mars and its physical location is as limited as That of Congonhas anyway.
One that emerges from this concession tranche is: is it running out now?
The multi-state bloc with Congonhas that AENA won well above what it asked for and in line with the initial concessions, which included Guarulhos.
But in the case of the much smaller northern block of two airports, the final value is well below the requested price, while it is au pair for general aviation airports.
Meanwhile, the estimated revenue for those GA airports, none of which have shown their more than a decade, are almost as huge as those for the northern block airports.
The 8th circular of concessions, next year, will come with Rio’s Santos Dumont Airport, the national equivalent of Congonhas, with a reconcession of that city’s Galeão International Airport, which it sold through the original concessionaire.
If there is going to be a ninth circular of concessions (many airports remain), other anomalies may follow.
Meanwhile, the next step in this auction will be the receipt of qualification documents from the block winning bidders, which is scheduled for August 25.
The signing of the concession contracts must take place after the approval of the result by the Board of Directors of the ANAC, on a date yet to be defined.